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QROPS : Stop press - major changes on their way!
HMRC HAVE alongside the draft clauses for the 2012 Finance Bill published a draft statutory instrument with the rather innocuous title of The Overseas Pension Schemes (Miscellaneous Amendments) Regulations 2012.
The intention is “to make the QROPS regime operate in line with the policy intention” - which is that “ an individual who leaves the UK and transfers their pension savings should be in broadly the same position as someone who remains in the UK with their pension savings”.
The draft regulations introduce new conditions that a scheme must satisfy to be and to remain as a QROPS.
The new conditions have the effect of :
1.) Ending with effect from 6 April 2012 the ability of long term non UK residents to transfer their pension funds to New Zealand and receive a lump sum of 100% of the fund.This change introduces certainty of timing, as this was in effect already the subject of legislation passing through the New Zealand Parliament.
The message therefore is that if you left the UK more than five years ago and wish to access your pension fund as an immediate lump sum there is no time to lose.
2.) Introducing a new and unexpected provision that requires uniformity of tax treatment of benefits for local and non local residents of the QROPS jurisdiction.
Ironically New Zealand pension schemes satisfy this new condition as there is no tax relief on pension contributions made by local residents, and there is no tax on benefits when they are paid out. No tax applies on benefits made to non residents of New Zealand either so “there is [an] exemption from tax for non resident members and it also applies to resident members” – which meets HMRC requirements as now drafted.
This however would seem not to be the case with regard to Guernsey and Isle of Man QROPS where pension schemes differentiate the of tax treatment of benefits between local residents and non residents. So as local residents are taxed on income benefits and non local residents are not taxed on such benefits the new condition under the draft regulations are not satisfied.
No doubt there will be some serious lobbying to take place over the next few weeks to have this changed but we are where we are.
Other proposals in the draft regulations are concerned with, (but only in relation to transfers to QROPS made after 5 April 2012), putting in place a new and much shorter reporting period for the UK scheme making the transfer to adhere to.
The five complete tax year rule as it relates to payments to QROPS members and their taxation remains unchanged, but all the same schemes will be required to report payments made for a full ten years after the transfer takes place. No doubt this extended reporting provision is to ensure that all schemes which are registered as QROPS satisfy the new conditions and do not seek to abuse the rules.
For further information about QROPS and Pension Planning opportunities please contact us today by clicking the link Here and leaving a few basic details on the form at the foot of the page.
More Blogs By Robert Burns BA (Hons), FCCA , Cert PFS
- QROPS – All Change From April 2012
- Do you have a UK pension fund? How secure is it?
- Quantitative Easing - good or bad (or both) for your UK Pension Fund?
- Did Your Pension Fund Fall By 15 Percent in August ?
- New Zealand QROPS : Only Available For A Further 12 Months ?
- QROPS Jurisdictions in Focus : New Zealand
- QROPS Jurisdiction in Focus : Guernsey
- QROPS - the realities of giving and receiving advice
- QROPs - Choice of adviser and choice of jurisdiction
- Why not spring clean your pension ?
- SIP Cards and Means Tested Prescriptions in Spain
- Claiming Child Benefits
- Transfering your UK National Insurance Contributions to Spain
- Spanish 'Large Family' Discount Card
- Applying for your Spanish prescription charge reimbursement
- What is a Funeral Plan and Why would I need one ?
- Currency Exchange Jargon Explained
- Glossary of useful Legal, Financial & Procedural Phrases
- Claiming UK Benefits in Spain
- Making a will in Spain
- Voting by post in Spanish elections
- How to Apply for Free State Healthcare in Spain
Blogs From Premier Pension Solutions SL
- QROPS – HMRC Introduces changes that create havoc in the market place
- The Economy : What can we look forward to in 2012 ?
- Beyond the tipping point - where next ?
- New Zealand QROPS - good news for all concerned
- Pensions and Politicians
- Changes re New Zealand QROPS - Things are becoming clearer
- QROPS Jurisdictions in Focus : A Round-Up
- QROPS Jurisdiction in Focus : Isle of Man
- QROPS for the UK Expat in Spain
- Could this happen to your UK pension fund?
- Maximising the outcome from your UK Pension fund
- UK Moves Towards Pension Flexibility - But QROPS Still The Expat Choice
- HM Treasury Propose Early Access To UK Pension Savings
- A Hidden Gem In The World Of Pensions
- QROPS - New Zealand in focus.